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High-frequency Confusing Issues on Individual Income Tax in China

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Q:
What are the advantages of setting up a company in China Qianhai Free Trade Zone (FTZ)?
A:
One of the biggest advantages of registering a Qianhai company is the enjoyment of tax benefits. According to the State Taxation Administration of the PRC, enterprises incorporated in Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (China Qianhai FTZ) may apply for the preferential corporate income tax rate of 15% if they are engaging in the business industries encouraged in Qianhai.  

Q:
Which industries in Qianhai can apply for preferential corporate income tax rate?
A:
According to the State Taxation Administration of the PRC, the following industries may apply for 15% corporate income tax rate in Qianhai: modern logistics industry, information service industry, science and technology service industry, culture and creative industry.

Q:
Is there any minimum registered capital requirement for setting up a company in Qianhai?
A:
The minimum registered capital required for a company registered in Qianhai is RMB5 million according to Qianhai authority. However, the above minimum capital requirement has been abolished for a company with sole investment from Hong Kong. The investors from Hong Kong SAR may decide on the capital amount at their own discretion.

Q:
Can I set up a wholly foreign owned training institution in Qianhai?
A:
Hong Kong or Macao service suppliers can set up wholly foreign owned non-academic vocational skills training institutions in Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone according Qianhai authority. Other foreign investors are not allowed to set up wholly foreign owned training institutions in Qianhai.

Q:
How to define Hong Kong or Macao service suppliers?
A:
According to the Closer Economic Partnership Arrangement (CEPA) among China’s mainland, Hong Kong and Macao, Hong Kong or Macao service suppliers includes nature persons and legal persons. A nature person refers to a Hong Kong or Macao permanent resident. A legal person without a Certificate of Hong Kong or Macao Service Supplier issued by Hong Kong Trade and Industry Department or Macao Economic Bureau respectively cannot enjoy the preferential policies under CEPA.

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